Filing for bankruptcy can seem frightening and overwhelming. There is a great deal of misinformation about what bankruptcy actually is and how it affects the average consumer. Here are the top 5 misconceptions about filing for bankruptcy.
1. You’ll Lose All Your Possessions
While it is true that if you file a Chapter 7 bankruptcy, your non-exempt assets will be liquidated, but you might be surprised what can be considered exempt. You’re not going to lose your home or the only car you have. If you file a Chapter 13 bankruptcy, you will not have to liquidate any of your assets at all.
2. Your Credit Will Be Ruined Forever
Filing for bankruptcy does affect your credit, but it falls off your credit report after 7-10 years. Many people find that it is easier to build their credit back up after filing for bankruptcy than it is to continue fighting with collections agencies and trying to pay bills you simply cannot afford.
3. You Have to Be Completely Broke to File Bankruptcy
Although many people wait until they are broke to file, you don’t necessarily have to be and this is not always the best option. For individuals who are struggling financially but haven’t hit rock bottom, bankruptcy may be what keeps them afloat and allows them to rebuild a better financial future, faster.
4. You’ll Never Be Able to Buy a House Again
While it is true that it is more difficult to buy a home after filing for bankruptcy, this is only for a short period of time. Many mortgage lenders allow individuals to apply for a home loan well before the bankruptcy has fallen off their credit report.
5. Student Loans Can’t Be Discharged in a Bankruptcy
It’s true that most of the time, a student loan will not be discharged in a bankruptcy. However, there are some exceptions. An experienced bankruptcy attorney can help you determine if you may be eligible for a student loan discharge.
At the Law Office of Howard Tagg, we know how confusing filing for bankruptcy can be. We’re committed to helping our clients overcome the financial distress they are experiencing and build a better financial future by starting off with a clean slate. Contact us today for a consultation to discuss your financial situation and learn more about how we can assist you. Call now at (903) 581-9961.